Managing salary expectations in Lifetime Planner
In the Lifetime Planner, salaries are a primary source of income for you and your spouse, whether earned before or after retirement. You can enter salary details using the Add Salary window, where you specify key information such as the earner, gross annual salary, and how it adjusts over time.
Understanding salaries in your plan
A salary is the money you or your spouse earns from employment each year. Salaries can be earned both before and after retirement, depending on your employment status and retirement plans. You always pay income taxes on your salary. Additionally, you may pay Social Security and Medicare taxes depending on whether you are a regular employee or self-employed.
Adding and managing salaries
When adding a salary, you will need to specify who earns the salary, either You or Spouse. Then, provide a Name or description of the salary, and enter the Gross annual salary. You can also indicate how the salary will increase over time by choosing from options like Inflation (3.0%) or setting a custom rate.
You can specify the start and end dates for the salary by selecting a Specific date for each. Additionally, you can indicate your Employment status, whether as a Regular employee or Self-employed. If applicable, select the checkbox indicating that Social Security taxes are paid on this salary.
Impact of salary on your financial plan
Salaries are a crucial part of your financial plan in the Lifetime Planner, particularly when determining whether your income will cover taxes, loan payments, and living expenses. If your salary and other income sources are insufficient to meet these obligations, your plan will rely on savings by selling investments. This process can affect your overall savings and investment growth if not properly managed.
Reviewing and adjusting salaries
Periodically reviewing your salary entries in the Lifetime Planner is essential to ensure your plan remains accurate. You may need to adjust your salary details if you change jobs, retire, or experience changes in employment status. Updating this information helps keep your financial plan realistic and reliable.